The director of the Serious Fraud Office has issued an unprecedented public rejection of certain criticisms from a judge who presided over the agency's failed attempts to bring a high profile bribery conviction.

The case concerned allegations of a London fixer channelling millions dollars of contract kickbacks to members of the Bahraini royal family and Judge Nicholas Loraine-Smith yesterday accused the SFO of mismanagement over its attempted prosecution of Belgravia-based businessman Victor Dahdaleh.

He said the prosecution team had relied too heavily on Akin Gump, a US law firm which, at the same, time had been advising Bahrain's state-run aluminium firm Alba in relation to a parallel civil claim alleging bribery, being pursued in the American courts against Dahdaleh and others.

"The fact of delegation to a law firm acting in a foreign jurisdiction, with interests in direct conflict with the defendant's, was bound to result in very real complications," the judge said. "The SFO gave the defence the opportunity to describe the prosecution as being part-motivated by the commercial interests of Alba in the civil litigation in the USA."

The allegation of mismanagement is a major blow for SFO director David Green QC, who was brought in by the attorney general two years ago to sharpen up the agency in the wake of the shambolic investigation into failed Icelandic bank Kaupthing and its largest customers, the Tchenguiz brothers, who are now suing for damages.

The SFO last night said Judge Loraine-Smith was wrong. "No aspect of this investigation was delegated. It is a routine feature of cases where third party companies have legal representation for those lawyers to act as an intermediary between the prosecuting authority and the company in question.

"In this case we told Akin Gump exactly what material we wanted and we have no reason to believe that they did anything other than provide it to us."

The SFO decided to drop its case against Dahdaleh last December, in part because lawyers for Akin Gump changed their mind in the middle of the trial and said they were no longer willing to be cross examined by Dahdaleh's legal team.

Earlier in the trial, SFO case controller Sasi-Kanth Mallela was cross-examined repeatedly by defence counsel over whether aspects of the investigation had been delegated to Akin Gump. He denied it, until Judge Loraine-Smith himself pressed the SFO lawyer: "You delegated the investigation in Bahrain to Akin Gump." Mallela replied: "That's right."

SFO director Green remains adamant that was not the case. Mallela has since left the SFO and now works for US law firm K&L Gates.

Andrew Oldland QC, who has acted for the SFO in the past, last night said: "Although the SFO may not agree that any part of their investigation was 'delegated', the stark reality is that it would have been much better for SFO investigators to have done much of the investigative work carried out by Akin Gump themselves, so as to avoid any allegations of partiality. One cannot help but think that one of the drivers behind this decision was the SFO's lack of resources at the time."

He pointed out that the perils of prosecutors relying on the work of interested third parties was well established. The Office of Fair Trading's prosecution of British Airways over an alleged price-fixing conspiracy collapsed when the courts determined it had relied too heavily on evidence obtained by BA's competitor Virgin Airways.